EU to cut budget for first time in 60 years

BRUSSELS: EU leaders appear ready to cut the bloc's budget for the first time in its six-decade history, with a tentative agreement to trim spending by 3 per cent in absolute terms over the rest of the decade, diplomats say.

As marathon talks entered an 18th hour, a sustained push led by the British Prime Minister, David Cameron, for the EU to share in the austerity cuts the 27-member states are implementing won crucial backing from the German Chancellor, Angela Merkel.

While France and Italy still fought for funds aimed at trimming record European unemployment, a lowered spending ceiling of €908.4 billion ($1.19 trillion) was put to the leaders on Friday afternoon.

The new figures would mean a first-ever fall in the EU's seven-year budget in absolute terms against the previous term.

Hours of hard bargaining were still expected before leaders agreed on all the details, with one diplomat saying the numbers might still be tweaked.

An absolute ceiling of €960 billion was set for spending ''commitments'' between next year and 2020, down from the €973 billion target that Cameron and allies such as the Netherlands rejected at the previous budget summit in November, which collapsed without any deal.

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In the EU, budgeting process commitments refer to the maximum amount that can be allocated to programs during the budget period, while actual spending or ''payments'' is usually lower as projects are delayed or dropped.

Originally, the European Commission wanted a 5 per cent increase in EU commitments to €1.04 trillion - about 1 per cent of its total gross domestic product.

The contours of the deal were thrashed out during multiple mini-meetings, and included €6 billion for a fund to tackle youth unemployment.

Jobless numbers across the EU are more than 26 million, with nearly three out of five people under the age of 25 out of work in Spain and Greece.